Investors Pin Hopes on Intel’s newly appointed CEO, Lip-Bu Tan, as he takes the reins at a critical juncture. The semiconductor giant has struggled to keep pace with its rivals, and Wall Street is closely watching Tan’s next moves.
A semiconductor industry veteran, Tan assumed the role on March 12, bringing with him a wealth of experience from his tenure at Cadence Design Systems and board positions at 14 semiconductor companies, including Intel. His appointment was met with optimism, and Intel’s stock surged over 15% the following day.
New Hope Amid Crisis
However, Tan inherits a company that is facing deep financial troubles. Intel’s mounting losses have made it a potential takeover target, with some analysts suggesting a breakup could be in its best interest. Yet, Tan has signaled his intent to keep Intel intact, focusing instead on revitalizing its foundry business and strengthening its position in the AI chip market.
Bolstering Intel’s Foundry Business
Intel’s core challenge is its foundry business, which has struggled to attract outside customers and remains a financial drain. Intel’s model of designing and manufacturing its chips is increasingly seen as a disadvantage in an industry where competitors like AMD and Nvidia have moved ahead by outsourcing production to foundries such as TSMC.
Former CEO Pat Gelsinger attempted to reverse Intel’s fortunes by opening its manufacturing arm to external clients under Intel Foundry Services (IFS). While the initiative secured partnerships with tech giants like Amazon and Microsoft, the financials remain grim- IFS lost $13.4 billion on $17.5 billion in revenue in 2024.
While early concerns about 18A’s progress surfaced, recent reports suggest a more optimistic outlook among Intel employees. As Moor Insights & Strategy analyst Anshel Sag put it: “if the results are good and companies are happy, they’ll increase their capacity at’ the foundry.”
Intel’s AI Gamble
Learning from Past Mistakes, Tan plans to push significantly into AI chips to close the gap with Nvidia. However, Intel’s track record in the space has been fraught with missteps. From scrapping the Larrabee GPU project in 2009 to the failed Falcon Shores AI GPU effort in January, the company has repeatedly stumbled in capitalizing on AI’s explosive growth.
A former high-level Intel executive noted, “Intel has a very good finance organization, but the company does sometimes make these decisions that are overly led by the early years’ financial outcome.”
For Tan, patience and long-term vision will be crucial. Analysts argue that if Intel hopes to compete in AI, it must be willing to weather short-term losses while investing in innovative products that can gain traction over time.
Tan must also address Intel’s internal culture by revising Intel’s Workforce Beyond operational challenges. Current and former employees describe the company—known internally as “Team Blue” as bureaucratic and sluggish. Reshaping corporate culture while managing potential job cuts is a delicate balancing act.
Tan has acknowledged that “hard decisions” lie ahead, and many employees anticipate significant layoffs in the coming months. While cutting middle management could streamline operations, some fear it may disrupt already understaffed teams and hinder progress.
Despite these concerns, a former Intel executive highlighted the company’s greatest strength—its workforce. “The depth of talent at Intel is immense, and the loyalty that people have is astounding.” “The answer lies in inspiring the people you have,” he further added.
The Road Ahead
Lip-Bu Tan’s leadership comes at a defining moment for Intel. His strategy of strengthening the foundry, making a serious AI play, and revitalizing company culture will determine whether Intel regains its competitive edge or continues its downward spiral. The next few months will be pivotal as investors, employees, and analysts watch to see if he can steer the company toward a sustainable future.
